Falling oil prices and a weaker loonie could put some more muscle into Windsor’s auto manufacturing sector.

Oil prices have dipped to around $40 a barrel in recent weeks — a steep decline from the $100 prices over the past few years. Those high prices spurred companies to mine oil from more expensive sources, such as Alberta’s oil sands and helped put Canada’s dollar at par with the U.S. greenback as recently as two years ago. The loonie has since fallen and is now hovering just below 85 cents US.

Source: U.S. Energy Information Administration

While it’s only a prediction, the consensus is that oil prices will continue to fall over the coming year, said Camilla Sutton, Scotiabank’s chief currency strategist.

The plus side for drivers is that as oil prices drop, the cost to fill up a tank of gas goes down.

“The big link with this price drop is the fact that it boosts consumer spending in the United States,” said Mike Moffatt, an economist and assistant professor in business at Western University.

Source: U.S. Energy Information Administration

“Consumers have a lot more purchasing power because they’re not spending so much on gas and some of that extra money will go to new cars,” said Moffatt, who expects to see 2015 U.S. auto sales soar to levels not reached since 2001.

If oil prices stay low for a few years and hold the value of the Canadian dollar down, Windsor will become more competitive, he said.

“(General Motors) and Ford and Chrysler aren’t going to all of a sudden change their production decisions based on day-to-day currency fluctuations,” Moffatt said. “But if the Canadian dollar stays low for a very long time, you might start to see plant expansions going on as well in Canada to take advantage of that low dollar.”

Canada has missed out on several major auto investments over the past decade. In October,

The bulk of new auto assembly investments announced between 2010 and 2013 were in China, Mexico and Brazil, according to a February 2014 report by Tony Faria, of the University of Windsor’s Office of Automotive and Vehicle Research. The U.S., Russia and India also won significant investments while Canada saw very little new spending.

“If we have a dollar at 75 or 80 cents for a very long time, then companies will start to put that into their decision-making process because again Canada and Southwestern Ontario starts to look less expensive at that point,” Moffatt said.

The lower loonie won’t be enough to assure GM’s future in Canada, CEO Mary Barra said last week.

“We don’t make major footprint decisions based on those types of (currency) fluctuations,” she said during a news conference in Detroit.

Barra wouldn’t comment on GM’s future in Canada, except to say the vehicles it builds here are “very important.”

Moffatt noted that dropping oil and gas prices may also lead to consumers buying the bigger vehicles that are assembled in Canada.

“People start going into larger SUVs and trucks simply because it’s not costing them quite as much to fill up,” he said.

While that may boost truck sales more than anything, it could also increase the demand for minivans coming from Windsor’s Chrysler plant, said Moffatt. “You may see some families go from a smaller sedan to a minivan with lower oil prices.”

Light truck sales in the U.S. increased by 14 per cent from December 2013 to December 2014, according to Motor Intelligence. Over the same period passenger car sales increased by seven per cent.

About 85 per cent of the cars made in Canada are exported and almost all of those go to the U.S. Many of the vehicles manufactured in Windsor are sold to California and New York.

“In the long run, lower oil prices are good,” Moffatt said. “You will see an economic slowdown in oil producing regions but we export more cars to places that don’t produce oil.”

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